VW Chief's To-Do List: 'Fix the Organization'

DETROIT (AdAge.com) -- If admitting to past mistakes is one of the 12 steps, Volkswagen of America might be on the road to recovery.
Stefan Jacoby Credit: Volkswagen
President-CEO Stefan Jacoby, the 49-year-old former exec VP-global marketing and sales for the Volkswagen Group in Wolfsburg, told Advertising Age that "fixing the organization" here is at the top of his to-do list.

Made mistakes
VW has indeed made mistakes in the U.S. in products, quality and its organization, all of which contributed to the world's fourth-largest automaker reporting an operating loss of some $800 million in North America in 2006. The automaker hasn't posted a full-year profit in this country since 2002, according to Advertising Age sibling Automotive News. But its biggest marketing misstep was to pursue a niche-brand strategy.

"We have to address our communications with a wider net," said Mr. Jacoby, who added that he appreciated the work Kerri Martin, the marketer's former director-brand innovation, did for Volkswagen after appointing Crispin, Porter & Bogusky, Miami, its agency in late 2005.

During Ms. Martin's tenure, VW had some of the most talked-about ad work in the category, but Mr. Jacoby said that, in retrospect, it was too narrow. (Mr. Jacoby will be interviewing an undisclosed outsider for the top marketing job, now a VP-marketing post, left vacant in January by Ms. Martin's departure.)

He said, however, he has no intention of changing ad agencies despite grapevine chatter that VW could move its account, noting that the automaker is partly to blame for misguided work.

Focus on local advertising
In the meanwhile, national ads have been absent as VW shifted to regional dealer advertising in July. "We are focusing on local advertising because we are losing our customers at the point of sale," Mr. Jacoby said. VW doesn't need to do brand advertising because brand awareness is high, he added.

The VW brand cut its first-half ad spending in measured media this year by more than half to $72 million, according to TNS Media Intelligence. The brand's U.S. sales through August are flat, down 3.6% to 155,188 vehicles.

Charlie Hughes, founder of consultant BrandRules and a former top auto executive, said VW has confused Americans about its brand with inconsistent ads and an ill-fated move upmarket earlier this decade. He called VW's "Drivers Wanted" advertising under former agency Arnold, Boston, one of the most successful auto campaigns in recent history. (Ms. Martin ditched it when she hired Crispin without a review.)

Shuffling staffers
In one effort to reduce bureaucracy, Mr. Jacoby is starting to relocate 150 of the 1,400 staffers from VW and sibling Audi of America to northern Virginia's Fairfax County, where there will be a total of 400 employees by the end of next year. VW will keep some 600 employees and contractors in the Detroit area for engineering and procurement.

VW will start selling the 2009 Jetta TDI next May and is kicking off a four-month "Dieselution Tour" showcasing the environmental and performance advances in its diesel technology. The stops will include environmental and alternative fuel festivals, auto shows and the 2008 Super Bowl.